Monday, 8 August 2016

A divided nation

After the Brexit vote, economists and others who voted Remain are
quite right to say
I told you so as the economic hit they expected comes to pass. The
Brexit Bust needs to be labelled clearly, given the power the Leave
side has over the means of communication. (Those behind that campaign
are already talking
utter nonsense in order to pretend it had nothing to do with them.)
But those who voted Remain also need to understand why they lost.

The
studies I’m going to focus on here use regressions and the
breakdown of the Brexit vote district by district. [1] It is important to
do regression analysis, which can look at more than one factor at a
time, because influences are correlated with each other. We might
note, for example, that districts are less likely to vote Leave if
they contain relatively high earners, or relatively well educated
people. So is it lack of education or lack of money that caused
people to vote Leave? That is what any kind of multiple regression
can try and sort out.

Before
looking at individual studies, let me mention some things that appear
to be uncontroversial. Education and age are key determinates: if you
are less educated or older you tend to vote Leave. Both matter
independently: although young people with few qualifications tend to
vote Leave, they are less likely to do so than less qualified older
people.Once you take these into account, income is not a significant
factor. Geography matters in key ways. One of those is that people in
Scotland and Northern Ireland were much less likely to want to leave
(controlling for other factors). The other I will come to.

A key issue is whether the local level of migration has had an
influence. Stephen Clarke and Matthew Whittaker at the Resolution
Foundation find
that the level of immigration is not important, but its recent rate
of change is, in making people vote Leave. Zsolt Darvas at Bruegel
also finds
the level unimportant. However Monica Langella and Alan Manning from
the LSE find
that areas with high immigration are more likely to vote Leave, and
confirm the finding that the rate of change matters too. So while two
studies agree that areas with a recent large increase in immigration
are more likely to vote leave, more work needs to be done on whether
its actual level matters. However, even if it matters, it does not
matter that much, as the large majority for Remain in London tells
us.

One
other area where the studies differ is employment or unemployment.
Clarke and Whittaker suggest areas with a low employment rate are
more likely to vote Leave, but Langella and Manning seem to find the
opposite, and Darvas says any impact from levels of unemployment
(which is not the same as the inverse of the employment rate) is
explained by other factors which I will now come to.

There are some variables that have not been considered by all three
of these studies. Darvas has one particularly interesting result: the
Leave vote increases in areas where there is a lot of poverty and
local inequality. Langella and Manning find that areas with long term
declines in agricultural, manufacturing or public employment are more
likely to vote Leave. This is also the conclusion
of a team led by Bristol geographer Ron Johnston, which is worth quoting
in full.

“There
are substantial parts of the country where large numbers of people
have lost out from the deindustrialisation and globalisation of the
last few decades of neo-liberal economic policies, and where the
educational system has not helped large proportions of the young to
equip themselves for the new labour market. Increasing numbers in
these disadvantaged groups were won over during the last few decades
by the campaigns in parts of the print media, taken up by UKIP since
the 1990s, linking their situations to the impact of immigration –
uncontrollable because of the EU freedom of movement of labour
principle. The wider Leave campaign built on that foundation in 2016,
producing the geography displayed here.”

That conclusion of course goes beyond the finding
that areas hard hit by globalisation tended to vote Leave, and adds
an explanation that sees the press and politicians actively trying to
link the experience of disadvantage to the issue of immigration. It
is an argument I have also made.
Unfortunately it is an argument that is very difficult to prove using
regression analysis, because - as newspapers often argue - they may
print just what sells newspapers, so any correlation does not imply
causation.It is also important to remember that the link between voting Leave and areas of deindustrialisation is in additional to the strong links with education and age. Education may fit in with a story where the anti-EU stance (to say bias does not do it justice) of most of the tabloid press is important, for obvious reasons. The same is true with age, as younger people are likely to get their information by other means than the tabloid press.

There is another, very different, line of argument that tries to
explain the Leave vote not in terms of class but psychology/culture.
Eric Kaufmann finds
simple correlations between voting Leave and authoritarianism. A
story you can tell is that, for some at least, Brexit was a vote
against not neoliberalism but social liberalism. The link between
social liberalism and the EU is once again migration, which
represents one more unwelcome change for social conservatives. Social conservatism and authoritarianism may also map more easily into nationalism and wanting to 'take control', and it was part of the tabloid 'grooming' to do exactly that. Social conservatism may also explain the importance of age and perhaps also education.There is no reason why we need to choose between the economic and the social types of explanation. Kaufmann and Johnston et al can both be
right. As MaxWind-Cowiesays
(quoted by Rick here):

“Bringing
together the dissatisfied of Tunbridge Wells and the downtrodden of
Merseyside is a remarkable feat, and it stems from UKIP’s empathy
for those who have been left behind by the relentless march of
globalisation and glib liberalism.”

Both these explanations see antagonism to the idea (rather than the
actuality) of migration as the way an underlying grievance got
translated into a dislike of the EU. But was immigration really so
crucial? A widely quoted poll
by Lord Ashcroft says a wish for sovereignty was more important. The
problem here, of course, is that sovereignty - and a phrase like
taking back control - is an all embracing term which might well be
seen as more encompassing than just a concern about immigration. It
really needs a follow-up asking what aspects of sovereignty are
important. If we look at what Leavers thought was important, the
“ability to control our own laws” seemed to have little to do
with the final vote compared to more standard concerns, including
immigration.

However there are other aspects of the Ashcroft poll that I think are
revealing. First, economic arguments were important for Remain
voters. The economic message did get through to many voters. Second,
the NHS was important to Leave voters, so the point economists also
made that ending free movement would harm the NHS was either not
believed or did not get through to this group. Indeed “more
than two thirds (69%) of leavers, by contrast, thought the decision
“might make us a bit better or worse off as a country, but there
probably isn’t much in it either way””. Whether they did not
know about the overwhelming consensus among economists who thought
otherwise, or chose to ignore it, we cannot tell.

Third, Leave voters are far more pessimistic about the future, and
also tend to believe that life today is much worse than life 30 years
ago. Finally,
those who thought the following were a source of ill rather than good
- multiculturalism, social liberalism, feminism, globalisation, the
internet, the green movement and immigration - tended by large
majorities to vote Leave. Only in the case of capitalism did as many
Remain and Leave voters cite it as a source of ill. These results
suggest that Leave voters were those left behind in modern society in
either an economic or social way (or perhaps both).

Taking all this evidence into account it seems that the Brexit vote
was a protest vote against both the impact of globalisation and
social liberalism. The two are connected by immigration, and of
course the one certainty of the Brexit debate was that free movement
prevented controls on EU migration. But that does not mean defeat was
inevitable, as Chris makes
clear. Kevin O’Rourke points out that the state can play an active role in compensating the losers from globalisation, and of course in recent years there has been an attempt to roll back the state. Furthermore, as Johnston et al suggest, the connection between economic
decline and immigration is more manufactured than real. Tomorrow I’ll discuss both the campaign and what
implications this all might have.

[1] Please let me know if I missed any studies. One I found out about as this post was about to be published was this by Richard Mann.Rolling Postscript: Studies I've seen since. This by Jo Michell (particularly on migration impact). Geoff Tily argues that London may be special.

29 comments:

That's really useful, thanks Simon. You might be covering it tomorrow, but this piece on the very different tactics adopted by the remain campaigns seems pertinent, particularly if you believe that advertising works: https://www.linkedin.com/pulse/epicfail-how-britain-stronger-europe-blew-basics-pr-marketing-hind (As an aside, I think we now know which 50% of advertising now works).

If your analysis is correct (I think it is), it could be argued that globalisation and social liberalisation were the powder keg and the short campaign was the fuse.

'Nothing is more misleading than comparison between the Commonwealth immigrant in Britain and the American Negro. The Negro population of the United States, which was already in existence before the United States became a nation, started literally as slaves and were later given the franchise and other rights of citizenship, to the exercise of which they have only gradually and still incompletely come. The Commonwealth immigrant came to Britain as a full citizen, to a country which knew no discrimination between one citizen and another, and he entered instantly into the possession of the rights of every citizen, from the vote to free treatment under the National Health Service. Whatever drawbacks attended the immigrants arose not from the law or from public policy or from administration, but from those personal circumstances and accidents which cause, and always will cause, the fortunes and experience of one man to be different from another's. But while, to the immigrant, entry to this country was admission to privileges and opportunities eagerly sought, the impact upon the existing population was very different. For reasons which they could not comprehend, and in pursuance of a decision by default, on which they were never consulted, they found themselves made strangers in their own country.'

'A week or two ago I fell into conversation with a constituent, a middle-aged, quite ordinary working man employed in one of our nationalised industries. After a sentence or two about the weather, he suddenly said: "If I had the money to go, I wouldn't stay in this country." I made some deprecatory reply to the effect that even this government wouldn't last for ever; but he took no notice, and continued: "I have three children, all of them been through grammar school and two of them married now, with family. I shan't be satisfied till I have seen them all settled overseas. In this country in 15 or 20 years' time the black man will have the whip hand over the white man."'

Yes, I think there's a lot in the globalisation and social liberalisation (i.e. neoliberalism)argument. But I'd like to think we should focus a little more on discourse. Cameron and the right wing media have spent the last 6 years (and counting) hammering the EU. It was bound to take effect: Cameron was never going to be a convincing champion of a cause that he had very publicly attacked over the years.

6 years? I remember anti-EU headlines and stories going back to the 1980s. If you totalled up every EU related story covered by a British newspaper in the past 40 years, the decades of unrelenting lies would blow your head off.

The problem is, the progressive centre have never made any attempt to dispel these myths. They always felt that the EU project was too big and obviously beneficial to need defending from xenophobic jingoism. Turns out they were wrong. If you tell people every day for 40 years about faceless interfering bureaucrats wasting our money, and no-one says anything to contradict it, eventually people just accept it as the truth. See "Seb" below, for a prime example.

If I could make a couple of points as I think this interesting analysis is incomplete to some extent.

First, Vote Leave's 'taking back control' line did allow people to decide for themselves what issues they wanted dealt with in Westminster. A main one was, of course, was immigration. But the point is that, on principle, the belief that various decisions, be it that the VAT on tampons should be nil or we should kick out Abu Hamza's daughter in law, should be made in the UK was an valid reason to vote leave. You don't need to look behind it and ask why people wanted to take back control. As Ashcroft found, lots of people just did. They valued democracy and their ability to kick the bastards out.

Second, the paucity of the pro-EU case meant that Leave didn't need to provide overwhelming reasons to vote their way. For instance, the constant drone of the Euro-crisis, the failure of Cameron's renegotiation, that the UK just doesn't share the federalist vision that drives the EU project, the fact we were already semi-detached, and the lack of any reason outside economic forecasts to stay undermined Remain. As an economist, I can see why you think that the economic forecasts should have been determinative. In fact, I think they worked well in that Remain almost won when that was pretty much the only thing in their armoury.

Finally, I think your prejudicial use of the phrase 'protest vote' shows you may have missed a big point. The referendum was not a protest vote. People didn't vote to 'send a signal' because it was like a by election which didn't matter much. All the polls show people knew this was a high-stakes once in a generation decision, 'more important than a general election.' That is anything but a protest vote.

Indeed, the majority of the 52% genuinely thought they were voting in the best interests of their country, because they had only been exposed to one side of the argument, because that was the only side the media covered. Even intelligent, rational people can make horrifically bad decisions when faced with a barrage of misinformation from supposedly trustworthy sources.

Quite. I didn't vote as a "protest". I voted Remain, in the end, only because my children wanted to Remain. I was, by the end, at best, agnostic, if not positively Brexit, because I heard nothing from the Remainers which deserved my vote. You (our blogger) may well be right - the economic pie will be smaller as a result - but how it is cut up is just as important. If Brexit leads to a less unequal sharing of the national cake, I will be very happy. And immigration, among other issues, feeds into that.

David Simpson you are exactly right. The logic of comparative advantage goes against mainstream ethics. Comparative advantage is a utilitarian argument and utilitarianism breaks the golden rule of ethics. The remain camp asked voters to hurt economically marginalised UK nationals in order to achieve a greater good. Therefore there was no moral high ground to vote for and it was a choice between two socially unacceptable views. The remain campaign should have considered the ethics of its messages.

Many thanks for this very interesting and useful overview - I think your insight about the relationship between structural economic change and basic values must be correct. This is exciting (at least for me) because further progress in this area will need contributions from labour economics, spatial economics, political sociology & social psychology.

It's not greatly surprising that areas with weak demand for migrant labour and low wage growth were more heavily Leave; it would be interesting to think through any rational explanations for why this relationship might be mediated by anti-immigrant feeling, for example with regard to the O'Rourke point. Or, it could well largely be a lashing out.

I uploaded some analysis of BES survey data on Leave vote preference about three weeks ago here: http://bit.ly/2aLe2m8 - work-in-progress but it also considers the 'economics vs values' question with reference to work by Jonathan Haidt, Philip Tetlock & so on.

"Kevin O’Rourke points out that the state can play an active role in compensating the losers from globalisation"

It can't can it - other than stopping the immigration.

This goes beyond slipping people the odd fiver and hoping that they will shut up and go away. Or this crazy belief that you can throw money at hospitals, education and construction and they will magically appear fully formed and fully staffed - even though there is a skills shortage in all those areas.

If you import half the people from another area, then you have to import the other half to look after the first half. The problem can only be solved by stealing more skilled staff from other nations. Nations that have paid and trained those individuals to look after their own population.

Any idiot can grow the economy by importing another country. But if you do that then it is hardly surprising that productivity and investment is low - or that there is a brain drain from the source country that leaves the remaining residents there in despair and destitution.

Yet we know how this plays out, because it has played out already in the UK. London acts as a brain drain to the rest of the UK and there is insufficient transfers within the union to counteract that force. And that is within a fixed currency transfer area. The result is despair and desperation and a vote to change the way things work.

People in the UK have had enough of the way things are operating and want to change it. They don't want the black hole of London slowly sucking in the entire population of the surrounding area to live in increasingly high rise tenements in an overcrowded country. Hence Brexit.

Ha Joon Chang points out that globally wages are determined politically in each country by immigration controls and that nebulous thing called 'culture'. Mark Blyth has highlighted the impact of the elephant graph on western wage levels.

People are more than just optimising consumption units and dealing with that is outside the expertise of mainstream economists.

"If you import half the people from another area, then you have to import the other half to look after the first half. The problem can only be solved by stealing more skilled staff from other nations."

That's only true if you accept that the existing population is skilled to their maximum possible level, which is obviously not true. As a nation we under-invest in training and skills, and have done for years. We don't import nurses from abroad because there aren't people who are capable of becoming nurses in this country. We don't train enough.

This article appears to do what most articles like it are doing: it tries to gloss over the minute possibility that people actually do know what the EU is, and where it's headed, and they do not want to be part of it.

I understand full well how it all works and I consider myself even more educated than many of the 'intellectuals' (an arrogant way to refer to oneself) on the pros and cons of the European Union.

You could go out to any city and speak to someone who voted Leave, they could tell you 20+ directly EU-related reasons for wanting to leave and you would STILL write about how it's not really because of the EU.

Couldn't agree more. Every one of these refers to people of lesser education being inclined to vote 'leave'. The condescension is appalling. The case against UK's continued membership is clear on so may fronts - and I would add I have been working on EU matters for many years. I know the policy-making, legislative and regulatory process backwards, so am tired of being lectured by people who think they know better than I what is good for me.

"You could go out to any city and speak to someone who voted Leave, they could tell you 20+ directly EU-related reasons for wanting to leave"

Indeed, and they'd all be myths they'd read in the papers or on right wing blogposts/facebook memes that could be deconstructed with just 5 minutes explanation. Unfortunately, these people have neither the means of accessing that explanation nor the interest in actually listening to it.

I'm sorry, but anyone who understands the first thing about the EU project understands that it isn't perfect, but it is without a shadow of a doubt a net good thing.

The key determinant in the way people form opinions is the sources of information they are exposed to.

By and large, remain voters get their information from social media, the internet, personal experience or the convincing arguments of well-informed friends. Hence they tended to be younger and better educated, because young well-educated people have access to a huge range of contacts and information.

On the other hand, leave voters tend to get their information from the mainstream media, and the misinformation given to them by the mainstream media has been extremely consistent for several decades now: the EU is a very bad thing. So its no surprise that they voted it out. I know several leave voters who are utterly perplexed why anyone would vote to remain in something so obviously terrible and awful. By dint of their age and lack of contact with people who actually have first hand experience of the policies and impacts of the EU project, they only have the newspapers and the radio to go on: all of which were heavily biased towards the leave camp.

The results of Brexit was really just a big poll to find out how people consume information.

I think to really understand these issues you need to look at the causation, which as you allude to, these econometric studies cannot reveal. I think we should not jump to the conclusion that the rate of change does not matter that much. I would suspect this does matter if it is in a relatively low income area - which London isn't. And in such areas I would not be surprised if it makes a lot of difference. So it really might be rate of change in combination with relative income which is the vital determinant: singularly these factors don't matter, but combined their effect is great - it is not a simple aggregation of the two and you cannot separate the two.

We need people on this with the skills to understand the causal mechanisms - sociologists, psychologists...

"Indeed “more than two thirds (69%) of leavers, by contrast, thought the decision “might make us a bit better or worse off as a country, but there probably isn’t much in it either way””"

Worth noting that the underlying message of certain (politically dominant) strands of economics is actually hard at work here. The state of the economy is like the weather, no decisions we make, nor actions of government can make it better or worse...

“Wages in rich countries are determined more by immigration control than anything else, including any minimum wage legislation. How is the immigration maximum determined? Not by the ‘free’ labour market, which, if left alone, will end up replacing 80–90 per cent of native workers with cheaper, and often more productive, immigrants. Immigration is largely settled by politics. So, if you have any residual doubt about the massive role that the government plays in the economy’s free market, then pause to reflect that all our wages are, at root, politically determined.”

Chang, Ha-Joon. 2011. 23 Things they Don’t Tell you about Capitalism, Thing 1: There is no such thing as a free market

“… the living standards of the huge majority of people in rich countries critically depend on the existence of the most draconian control over their labour markets – immigration control. Despite this, immigration control is invisible to many and deliberately ignored by others, when they talk about the virtues of the free market.

I have already argued (see Thing 1) that there really is no such thing as a free market, but the example of immigration control reveals the sheer extent of market regulation that we have in supposedly free-market economies but fail to see. While they complain about minimum wage legislation, regulations on working hours, and various ‘artificial’ entry barriers into the labour market imposed by trade unions, few economists even mention immigration control as one of those nasty regulations hampering the workings of the free labour market. Hardly any of them advocates the abolition of immigration control. But, if they are to be consistent, they should also advocate free immigration. The fact that few of them do once again proves my point in Thing 1 that the boundary of the market is politically determined and that free-market economists are as ‘political’ as those who want to regulate markets. …

Countries have the right to decide how many immigrants they accept and in which parts of the labour market. All societies have limited capabilities to absorb immigrants, who often have very different cultural backgrounds, and it would be wrong to demand that a country goes over that limit. Too rapid an inflow of immigrants will not only lead to a sudden increase in competition for jobs but also stretch the physical and social infrastructures, such as housing and healthcare, and create tensions with the resident population. As important, if not as easily quantifiable, is the issue of national identity. It is a myth – a necessary myth, but a myth nonetheless – that nations have immutable national identities that cannot be, and should not be, changed. However, if there are too many immigrants coming in at the same time, the receiving society will have problems creating a new national identity, without which it may find it difficult to maintain social cohesion. This means that the speed and the scale of immigration need to be controlled.”

Chang, Ha-Joon. 2011. 23 Things they Don’t Tell you about Capitalism, Thing 3: Most people in rich countries are paid more than they should be

I just wanted to query your early argument that age and qualifications explain any income effect.

If I'm right the implicit argument made is that what the data is showing is that age and qualifications are correlated with income, with the suggestion being that age and quals explain away the impact of income.

A reason to think the opposite:

We tend to think of income as being determined by factors eg. qualification, experience, age and gender, but in this case at least if we are thinking about globalisation etc, then in some sense income is correlated with/determined by globalisation and freeing up labour markets in the sense that deindustrialisation/globalisation has reduced the wages of people without higher qualifications by reducing the manufacturing base etc.

So it might very well be that people who were on below median incomes previously for instance would have been less dissatisfied then people on median incomes are now, given that due to rising income inequality, they are now further away from the median.

In which case it might very well be that income has a predictive effect and that it is age & qualifications that are correlated with income: ie - older people with fewer qualifications are more likely to be 'left behind' and therefore have low incomes.

My econometrics is and always was a bit rusty, but surely if income is not an independent variable (ie. it is correlated with itself in that one person's income is correlated with another), then that affects the analysis). More generally, my suggestion is that a) income is correlated with globalisation/deindustrialisation, which is itself a predictor of brexit vote b) in which case it is less clear that age and qualifications effects will cancel out income as a significant factor.

Regarding the research about immigration and people's propensity to vote Leave, does the research differentiate between EU and non-EU immigration? There seems to be anecdotal evidence that people in some areas voted to Leave because they had 'concerns' about immigration from Pakistan and that they thought that a vote to Leave would limit/stop this.

For what it's worth, I suspect this was true. There was a surge in postal votes as the migrant crisis flared, and I have heard people talk about needing to leave the EU because of it. I still get people telling me the EU forced a wave of refugees to the UK when in reality we voluntarily took an embarrassingly meagre amount in.

This referendum offered the first opportunity in 19 years to say anything about immigration. in 1997 the level of immigration was around 50 thousand pa. When Labour took office and secretly opened the gates to unchecked immigration numbers rose instantly to 250-300 thousand. They have remained at these levels ever since,though changed from mostly east asian to east europaen. This represents the most obvious and visible aspect of globalisation and of EU control. The cultural and infrastructure pressures have pushed a very tolerant people to say enough!

Since both Leave and Remain voters despise capitalism, we have found common ground. The solution therefore seems simple: eliminate capitalism.

Whuffie economy? Robot paradise? Fabian socialist revolution with all billionaires up against the wall and shot, and a maximum wage enforced by the death penalty? Eliminate money and private property and set up a guaranteed minimum food/housing/clothing allotment instead? Pick your choice. Capitalism must go.

Not a single one of the explanatory variables in these studies is truly, or even close to, exogenous, so the results of the regression studies need to be taken with a truck load of salt. It's no wonder that low employment can *cause* a leave vote or a remain vote, depending on the study. It's also no wonder the meta-conclusion is that it could have been a bit of this and a bit of that.

At the very least, instruments should be used in the most obvious cases.

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